Chapter 7 Flashcards
Definition of LT care
All forms of continuing personal or nursing care and associated domestic services for people who are unable to look after themselves with some degree of support.
Care for those whose health is not expected to improve.
Where can LTC be provided?
Own home
Day centre
State-sponsored setting
Care home setting
Main concerns addressed by LTC
● Having insufficient funds to pay for care in old age
● Care available from the state (or informally) is inadequate
Care needs in old age may include:
● Domestic support
● Live-in care
● Residential care
● Medical care
What will influence the demand for LTC?
Level of state benefits + extent to which care may be provided informally.
Costs of care can be divided between:
● Living costs
● Housing costs
● Personal care - separated between nursing care and intermediate care.
What is intermediate care?
Recuperative services to reduce avoidable hospital admission + minimise dependence on ongoing LTC.
What are the additional costs resulting from deteriorating health?
● Small component of living costs
● Slightly larger component of housing costs
● With largest proportion being for personal care
How can care be provided?
Informal care - extended family
Formal care - paid for. Provided in person’s own home or community setting
What are the methods of funding insurance premiums?
● Single premium
● Regular premium
o Almost always escalate in line with the chosen benefit escalation rate
● Restricted regular premiums that either stop:
o At a certain age
o During a defined level of disability (i.e. waiver of premium)
● Retrospective payment, from the equity released after the sale of the home
Insurance solutions can be divided into:
Pre-funded plans - single premium at outset or regular premiums during period when no care required
Immediate needs plans: Single premium paid; care funded immediately
Does pre-funded plan require a trigger for payment of benefits?
Yes.
How is this trigger defined?
Not being able to undertake a specified number of ADLs with an overriding trigger of severe mental impairment
Structure of benefits can be:
● Provision of care on an indemnity basis
● Provision of care on an indemnity basis subject to maximum cash payments in a given period
● Fixed cash amounts specified in the policy
Do basic products offer a surrender benefit?
No.
Where regular premiums have been paid for a min period…
a paid-up benefit will be available.
What are the product variations
● Guaranteed vs Reviewable premiums
● Indemnity vs cash benefits
● Unit-linked version
What is included in guaranteed premiums that is significantly higher than under reviewable premiums?
Significant contingency loading
Which premium design dominates for pre-funded products?
Reviewable premiums
Describe indemnity benefits
o Pay for full cost of treatment or care
o Benefit amount is unknown, and often this will be paid directly to treatment or care provider
What is the advantage of paying benefit amount directly to treatment or care provider?
Insurers may be able to extract better terms from providers due to their size and experience
What is the disadvantage of paying benefit amount directly to treatment or care provider?
Uncertainty in future costs of benefits
Describe cash benefits
o Lump sum or more usually an income, level of which will be specified in policy
o Benefit level is chosen at time of purchase to meet expected costs of estimated levels of
assistance at time of need, in accordance with PH’s means to pay
What is the advantage of cash benefits?
PH has a choice - it can be directly applied to meet personal needs,
without being earmarked for particular purposes
